For the first time in Australian history, first home buyers in NSW will be given the choice to opt out of paying stamp duty upfront in exchange for a smaller annual tax.
With the new legislation now officially passed by the NSW Government, Premier Dominic Perrottet says this will be a game-changer for first home buyers, helping thousands of people get the keys to their first home sooner.
“First Home Buyer Choice will significantly reduce upfront costs, reduce the time needed to save for a deposit and will see the majority of eligible first home buyers paying less tax overall,”
– Treasurer Matt Kean
How does it work?
For buyers who choose to take advantage of the scheme, upon purchasing their first home will only be required to pay $400 + 0.3% of the property’s land value per annum.
For example, on an $830,000 apartment with a land value of $265,000, previously you would be required to pay $32,440 upfront in stamp duty* but now you can instead pay an initial annual property tax of just $1,195.
This effectively means that the state government is giving you roughly 27 years to pay off the stamp duty in quarterly instalments, interest free! *(Example of $830,000 apartment only).
Who is eligible?
If you’re buying your first home in NSW and you’re over 18 – you’re eligible.
The home has to be $1.5 million or less, you must be an Australian citizen or permanent resident, and you have to move into the house within the first year and live in it for at least six months.
What happens if I move out and it becomes an investment?
If you originally purchase the property as a first home buyer and opt into the annual tax scheme but later decide to use the property an investment, the scheme changes.
You will be required to pay $1500 + 1.1% per annum. The policy is specifically designed to help first home buyers get into the property market
Is the land locked into the property tax forever?
No. If properties that are subject to the property tax are sold, they will not be locked into the property tax for subsequent owners.
The new owners, if they are first home buyers, can then choose whether to pay the annual land tax or stamp duty.
If they’re not buying their first home – the usual stamp duty rules apply.
This means if you do decide to sell later down the track, opting into the scheme now will in no way impact your property’s long term value.
How soon can we take advantage of the new scheme?
The new scheme officially begins on 16 January 2023.
But this does not mean you have to wait until next year to take advantage of the change!
Any first home buyer who purchases their new home from 12 November 2022 onwards can next year apply for a refund of their lump sum stamp duty payment and choose to opt into the annual tax instead.
Piety Group in conjunction with Laver Residential Projects is going one step further and offering all first home buyers the chance to secure a new apartment at ONE The Waterfront or The Halston, North Strathfield with a deposit now and exchange after January 16, 2023.
This gives eligible buyers the chance to lock in our 2022 pricing today without having to apply for the lump sum stamp duty refund later.
Locking in prices today could end up saving new buyers thousands with Economic Policy Program Director at the Grattan Institute, Brendan Coates, acknowledging the reform could lead to other economic impacts.
“It could push up prices across the market – particularly for the homes that are eligible for this policy,” Coates said.